EXEC INTERVIEW: Ralph de la Vega, vice chairman, AT&T
15 March 2016 | Alan Burkitt-Gray
AT&T is now the biggest mobile provider in North America, covering the US and much of Mexico – but SDN is allowing it to take services worldwide, says vice chairman Ralph de la Vega.
AT&T is using Huawei equipment in its North American network and vice chairman Ralph de la Vega says that its performance is "excellent".
To be fair, it seems the kit was inherited from NII Holdings when AT&T bought the Mexican mobile operator out of bankruptcy in 2015 for $1.875 billion.
Nextel – which operated under the Nextel brand – announced its purchase of Huawei equipment for its 3G rollouts in both Mexico and Brazil in 2011. AT&T bought only the Mexican operation, not the Brazilian.
But since its purchase of Nextel Mexico, along with another Mexican operator, Iusacell, for $2.5 billion a few months earlier, AT&T has begun a major upgrade of both networks to 4G standards.
AT&T spent $4 billion buying the companies and "we made a commitment to the people of Mexico that we would invest another $3 billion by 2018 to build out a 4G LTE network to 100 million people in Mexico", De la Vega told Global Telecoms Business in an interview at the recent Mobile World Congress in Barcelona.
So far the new 4G network covers 45 million of the planned 100 million population, implying a spend of around $1.3 billion of the total $3 billion. "You can do the math," says De la Vega.
He confirms that this is the first time AT&T has had Huawei equipment in any of its network. The company also uses Ericsson equipment in AT&T Mexico.
Huawei was a supplier to Mexico before the AT&T acquisition, but it is clear that there has been a substantial re-equipment programme over the past year. Which companies has AT&T used to upgrade its Mexican networks? "We don’t comment on our supplier/vendor relationships," says a company official in an email to Global Telecoms Business.
Significantly, the company is building out the new 4G network to be completely integrated with its US LTE network.
"The whole idea is to make it an extension so it should look like you’re in the US. There is very little difference. That’s the beauty of having it contiguous," says De la Vega. "It should be seamless. You should be able to take a car from Canada to Mexico and you shouldn’t drop a call."
The existence of Huawei kit in AT&T Mexico, new or not, is likely to be controversial in the US because in October 2012 the four major US operators – AT&T, Sprint, T-Mobile US and Verizon – were blocked from buying network equipment from Chinese vendors because of alleged security threats. Two years earlier Sprint was forced to withdraw plans to use Huawei and ZTE equipment after a political campaign.
And since De la Vega’s interview with GTB, the issue has become live again thanks to the action taken by the US Department of Commerce against ZTE for its use of US hardware and software in exports to Iran.
Back to Mexico: "We’re hitting the major population centres. Until we build a network that’s a high quality network we’re not putting the AT&T brand on the property," says De la Vega. "We’ve just finished doing that in Mexico City and in other cities." The LTE network now reaches 44 cities, AT&T confirmed.
Asked how the Huawei kit was performing in Mexico, De la Vega says: "So far, excellent. Huawei is a good supplier." Would AT&T benefit from using Huawei in the US? "Perhaps," he said, but he acknowledged the political difficulties.
Comparing the dispute between Apple and US law enforcement, he says: "There shouldn’t be a company that dictates a policy to the country. By the same token there shouldn’t be a government agency that also dictates it unilaterally."
The US Congress "needs to address" the issues, he says. "Hopefully they’ll come away with some way to figure out how to balance security and privacy. I think in the end we’ll get to the right decision. Congress, which represents the people, should decide, and take a leadership role."
Is he irritated by the anti-Chinese stance taken by the people on Capitol Hill? "Not at all," says De la Vega.
He shakes his head in slight amazement that the law covering the issues dates back to 1789 – when the British were the enemy of the US, 13 years after the declaration of independence. "I think we’ll get the right decisions," he says of moves to bring things up to date.
Neither Ericsson nor Huawei have announced any new contracts with AT&T Mexico. Asked to comment, a Huawei spokesman says: "Huawei was the incumbent provider [before the acquisition]. Never announced."
But it’s clear that US operators including AT&T have been trying to build bridges with Chinese vendors. At the start of MWC week, John Donovan, chief strategy officer and group president of AT&T Technology and Operations, and Radhika Venkatraman, Verizon Wireless’s SVP and CIO, took part in a LightReading digital transformation summit in Barcelona that was sponsored by Huawei.
Huawei head Guo Ping has also called for a lifting of the US ban on Chinese vendors.
Not quite half way through the re-investment strategy in Mexico, De la Vega is happy with the outcome so far. "We’ve spent $4 billion to buy Iusacell and Nextel" and then AT&T committed to the $3 billion 4G upgrade. "A year later we did what we said we were going to do."
AT&T is so enthusiastic about the project because of "the pro-investment policies that Mexico has put in place", he adds. "The regulatory bodies of Mexico have given us what we needed to get started."
The Mexican telecoms market is dominated by América Móvil, which is controlled by Carlos Slim, one of the richest people in the world. The Mexican government is actively stimulating foreign investment, to increase competitive choice and reduce Slim’s 70% market share.
"They need to continue to be vigilant to make sure that competition continues to flourish," says De la Vega. "We couldn’t be happier about Mexico and our investments there, and our people. We have a terrific company in Mexico."
The re-equipment programme is extensive, he says. "It’s fibre to the building, it’s cell site equipment, it’s switching equipment, it’s backbone. We feel very good about the quality of the network."
The new network is using some of the existing towers that Iusacell and Nextel used. "We’re putting 4G LTE equipment on top of the towers and additional fibre backbone. It’s not a complete re-do, but it’s an extensive upgrade."
Now, AT&T covers 300 million people – "pops", in the industry’s jargon – with 4G in the US, and 45 million so far in Mexico. "That’s 345 million pops in North America – and that makes us the largest provider in North America," he beams.
When the Mexico rebuild is complete AT&T’s 4G mobile service will be available 400 million people. That will make it one of the largest in the world. China is, of course, much larger: China Telecom, to take just one, expected to have 95% coverage of about 1.3 billion population by the end of 2015.
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